JEDDAH / Arab News / Economy / Healthcare / April 24, 2011
Saudi Arabia has the largest health care market in the Gulf Cooperation Council (GCC), boasting the region's most technologically advanced infrastructure, state-of-the-art facilities and medical equipment.
Illustration by courtesy of zawya.com
Health care in the Kingdom is segmented structurally and provided for by the MoH, other public sector (OPS) — which includes the Ministry of Defense, National Guard, Ministry of Interior, medical colleges, and Saudi Aramco — as well as the private sector. By the end of 2009, there were 408 operating hospitals, and 2,037 primary health care centers (PHC). Both outpatient visits and inpatient admissions amounted to 131 million and 3 million, in 2009, respectively.
Demand for health care services will continue to rise over the upcoming five years, backed by rapid population growth, a larger ageing segment, and the prevalence of long-term non-communicable diseases. While the government has taken great steps to enhance public health-care delivery systems, it has fallen short on its stipulated targets outlined in the Kingdom's successive development plans.
Consequently, several initiatives have been undertaken to encourage private sector participation, such as the facilitation of financing vis-à-vis lending institutions. Opportunities for private players lie in the three tiers of medical care: Primary, secondary and tertiary. However, with government efforts divided between providing health care services for all three tiers, greater revenue drivers for the private sector will still be in secondary and tertiary care. Additionally, the anticipated all comprehensive health insurance schemes will act as a catalyst in propelling private sector participation forward, the NCB report said.
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(A) Population growth and aging segment
(B) Lifestyle diseases
(A) Health care sector share of GDP
(B) Government expenditure
(C) Other public sector expenditure
(D) Private sector revenues
Health care sector capacity
(A) Primary health care centers
(B) Secondary and tertiary care
(C) Hospital services market
(C-1) Operational hospitals and beds capacity
(C-2) Utilization Indicators
The sector outlook
(A) Health expenditure
(C) Hospital bed demand projections
(A) Success factors of private providers
Health care challenges
Over the next five years, the Kingdom will continue to face pressures on its health care delivery system. With a high population growth rate, longer life expectancy, and an increase in the incidence of NCDs, the health market will rely on private sector participation to shoulder increasing demand.
With saturated capacity, long queues, and limited opening hours at public hospitals, the efficiency and higher quality in private care by comparison have propelled private investment in the sector. "By 2015, we anticipate that the growth in compulsory private insurance will also increase demand on private investment in the health care sector," the NCB said in its report.
Going forward, the rising demand for hospitals and beds will require the Kingdom to invest an estimated total of SR23.3 billion between 2010 and 2015. An increment of 23,290 beds in both the public and private sectors will put the Kingdom at a feasible ratio of 2.5 hospital beds per 1,000 population, just below the current global average ratio of 2.7. The private sector's investment share will amount to a total of SR9.6 billion by 2015, equivalent to an annual outlay of approximately SR1.6 billion.
The success factors for private operators, beyond growth in key financial indicators, include the ability to sustain highly skilled medical manpower through profit sharing schemes, contractual relationships with large companies, and alliances with institutions or medical equipment providers that can offer private hospitals access to the latest machinery.
Challenges facing the sector include the highly capital-intensive nature of the industry acting as a barrier to entry, the lack of domestic talent and large reliance on foreign labor, and the rising cost of medical care restricting margins. Other risks constricting project funding from banks include asset-liability mismatch, operational inadequacies of contractors, and the inability to foreclose on hospitals in the event of defaults, the NCB report said.
© 2010 Arab News